The Paris Bourse fell this Thursday after the recent bullish series which allowed the Cac 40 to chain three successive records since the beginning of the week. In question, the change of tone of the American Federal Reserve, which hinted in the “minutes” of the last meeting of its monetary policy committee that the next rate hike could come sooner than expected and that the deflation of its assessment would intervene in the wake. Wall Street evolves without any real trend in the first half hour after a decline of more than 3% of the Nasdaq Composite, the most marked since last March.
Good or bad data, what’s the difference?
Around 4:30 p.m., the Cac 40 loses 1.77%, to 7,245.74 points in a business volume of 2.35 billion euros. In New York, the Dow jones yields 0.37%, S&P 500 0.29% and the Nasdaq Composite 0.64%.
Driven by the feeling that the wave of infections with the Omicron variant, deemed to be less dangerous than the previous ones, will not hamper the solid recovery of the euro zone economy, the recent rally thus marks a halt. The increase of 7,000, to 207,000, weekly jobless claims in the United States, against 195,000 anticipated, does nothing to help matters. The US trade deficit widened to $ 80.2 billion in November, from $ 67.2 billion in October. It should therefore weigh slightly on growth in the fourth quarter, contrary to the expectations of analysts at Capital Economics, who expected a slightly positive contribution.
” We are now entering a time when good data is bad because it fuels the Fed hawks, and bad data is also bad because it cannot fuel the Fed doves. », Said Ipek Ozkardeskaya, senior analyst at Swissquote this morning.
Rate hike and reduction in the Fed’s balance sheet
In its “minutes”, published last night, the Fed indicated that it should toughen its policy ” earlier or at a faster rate That envisaged by the members of the monetary policy committee in an attempt to contain inflationary pressures. Three rate hikes are expected this year, according to central bank projections released in December. Several members of the committee believe that at the current rate, the labor market will quickly approach full employment. The central bank’s balance sheet was also discussed, which exceeded $ 8.6 trillion last year, nearly 10 times the amount reached in December 2008.
If no decision has yet been made, ” it might be appropriate to start shrinking the size of the Federal Reserve’s balance sheet relatively soon after you start raising federal funds rates “, Judge the members of the Federal Reserve. In any event, and given the size of the institution’s balance sheet, its deflation will be faster than in the past.
In the bond market, the yield on the US 10-year bond briefly crossed the 1.75% threshold to 1.7511%, four basis points from its peak last year reached on March 30, before falling back to 1.7344%. According to contracts futures on Fed funds, the first rate hike could take place in March, immediately after the end of the asset purchase program put in place at the start of the pandemic.
Techs under pressure, speculation on Carrefour
Growth stocks that post the highest valuations are the most affected as their profit outlook appears less attractive when yields are higher and tend to be vulnerable when rates rise. Technologies are logically affected Capgemini thus loses 4.8%, Dassault Systèmes 3.9% and Teleperformance 4%. At the European level, the Stoxx 600 of technology fell by 3.1% and shows the largest sectoral decline. Luxury players, which represent a quarter of the capitalization of the flagship index, also weighed in, with declines from 3% to 4.8% for LVMH, Hermes, Kering and L’Oreal. EssilorLuxottica also drops nearly 4.7%.
Conversely, the values, deemed less expensive or undervalued are surrounded by the image of banks. BNP Paribas thus gains 0.7%, Societe Generale 1.6%.
crossroads takes another 5.5%. Auchan is considering a cash offer at 23.50 euros per share according to The echoes. For Bryan Garnier, such an amount should ” very probably »Be accepted by the shareholders. The Bloomberg agency reported, Wednesday afternoon, a renewed interest from its competitor Auchan for a merger.
ALD on the offensive in the Netherlands
Dassault Aviation gains 3.3%. The group announced that in 2021 it had received 49 orders for its Rafale fighter jet and 51 for its Falcon business jet. This figure does not include aircraft destined for the United Arab Emirates, with which Dassault Aviation signed a contract at the end of the year.
ALD gains 7.9% and takes the head of the SRD. The Societe Generale subsidiary in the long-term financing of vehicles plans to acquire its Dutch competitor LeasePlan for an amount of 4.9 billion euros.
Conversely, Coface loose 10.2% while Natixis sold all of its 10% stake for 174 million euros, or 11.55 euros per share.